Features » December 6, 2004

Cutting Our Benefits

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November 2 was just the beginning of the bad news. Two days after the election, before most of us had even recovered, President Bush told the country that he would use his “political capital” to privatize Social Security.

This declaration of war was smart strategy. Social Security is by far the country’s most important and successful social program. Over the last seven decades it has provided a decent retirement to tens of millions of workers and their spouses. It also provides disability and survivor insurance to almost the entire working population—nearly 2 million children are currently receiving survivors’ benefits. For these reasons, Social Security enjoys enormous public support, regularly getting approval ratings of close to 90 percent in public opinion surveys.

If Bush is going to privatize Social Security, he must move hard and fast—as he has. And if we are going to save it, progressive forces will have to mobilize quickly.

Fact vs. fear

The key to stopping this drive for privatization will be to educate the public about the basic facts on Social Security. For two decades, the right has been working overtime to undermine confidence in the program. Groups like the Concord Coalition have been telling the country that Social Security is a Ponzi scheme that will inevitably collapse once the baby boomers retire.

The fearmongers have been largely successful. Many workers, especially those under 40, are convinced that Social Security will be bankrupt before they see a dime in benefits. For these people, the promise of a private account sounds pretty good, since they don’t believe they will ever get anything from Social Security anyhow.

Progressives must use every means available to tell people that they have been lied to about Social Security. The program is unambiguously healthy. The Social Security trustees’ report (available on the Social Security Administration’s Web site) shows that the program can pay every penny of benefits through the year 2042, with no changes whatsoever.

Even after 2042, the trustees’ projections show that while the program won’t have enough to pay currently scheduled benefits—which are approximately 40 percent higher than current benefits—it will still have enough money to pay benefits higher than those that current retirees receive, even when indexed for inflation. The changes necessary to allow full scheduled benefits to be paid throughout Social Security’s 75-year planning period are smaller than the changes to Social Security—increased Social Security taxes and benefit cuts—that were made in each of the decades from the ’50s through the ’80s.

Last June, the nonpartisan Congressional Budget Office (CBO) made an independent assessment of Social Security’s finances and concluded that the program could pay all benefits even longer—until 2052—with no changes whatsoever. According to the CBO, the changes needed to keep the program fully funded through its 75-year planning period are less than half as large as the Social Security tax increases put in place in the ’80s.

Just to be clear, neither of these projections is based on a rosy scenario about the future. In fact, the Social Security trustees assume that over the next 75 years the economy will experience the slowest pace of productivity growth in its history—there’s no “new economy” in this story.

In short, the claims that Social Security is in imminent danger of bankruptcy are just like the claims about Saddam Hussein’s weapons of mass destruction—politically motivated lies.

One such claim that gets frequently repeated is that the Social Security trust fund has been “raided,” “spent,” or is just worthless pieces of paper. In fact, the Social Security trust fund holds almost $2 trillion of government bonds. Under the law, the government must repay these bonds to Social Security from general revenue—this means it will be repaid primarily from progressive personal and corporate income taxes, because workers have already paid for their Social Security benefits. In other words, the government is obligated to tax wealthy people like Donald Trump and Peter Peterson (the founder of the Concord Coalition) to pay for the Social Security benefits that the rest of us have already earned.

The Social Security system lent money to the government to buy these bonds. (This is by design—the trust fund was built up to help pay for the retirement of the baby boomers.) The fact that the government spent the money is meaningless—just as it is meaningless if the government spends the money it borrows by issuing any other bond. The government is still legally obligated to repay the bond. In short, the people who say “there is no trust fund” are misleading the public. There is a trust fund with $2 trillion (growing at the rate of $200 billion a year) unless we let Congress eliminate it.

Privatized pipe dreams

Are private accounts a remedy?

The Bush privatization plan proposes to couple newly created private accounts with large cuts in current basic Social Security benefits. Under this scheme each retiree will get benefits from both these sources.

First, it is important to realize that the privatizers are making implausible claims about the potential returns available from investing in the stock market. Remember, these are exactly the same people who at the peak of the Internet bubble in 2000 promised that workers would get great returns from investing their Social Security money in the stock market.

No privatizer has yet been able to document in numbers how the privatizers will get their projected stock returns (showing annual dividend payouts and capital gains). When it comes to simple arithmetic, involving trillions of dollars of workers’ Social Security money, the privatizers flunk the test.

While private accounts won’t do much to increase returns, they will certainly increase risk and add hugely to administrative costs. A worker who happens to retire during a market slump will see much of their benefit disappear. In countries that already have private accounts, like England and Chile, the administrative fees are between 15 and 20 percent of annual benefits. By comparison, the administrative costs of Social Security are less than 0.6 percent of annual benefits. In addition, retirees who want to buy an annuity (an inflation-protected life-long annual payout, like that provided by Social Security) will typically have to pay a fee of at least 10 percent of their private account to convert their account to an annuity.

The bottom line is that under Bush’s proposal, workers can expect to see considerably reduced benefits, since private accounts will not come close to making up for the accompanying benefit cuts. Under the plan that would provide the basis for Bush’s privatization scheme, an average 15-year-old today who retires in 2055 will lose more than 35 percent ($160,000) of his currently scheduled benefit over the course of his retirement. He stands to gain back less than one-third of this $160,000 loss from a private account.

Social Security privatization does not look good for most workers because they can expect large benefit cuts, but it is likely to be especially bad for those in lower-income brackets. While Bush’s privatization plan actually provides modest benefit increases for low-end workers, it also puts in place a structure that will force the middle class to depend less on the traditionally defined Social Security benefits and more on private retirement accounts.

Bush’s plan gradually reduces the size of the traditional benefit received by middle-class workers, while increasing the size of private accounts until finally the defined Social Security benefit will become almost irrelevant to anyone but the poor. Under the Bush plan, a child born today who earns an average wage during his working lifetime would get a defined benefit equal to just 10 percent of his wage when he retires. As the middle class depends less and less on Social Security, the benefits pledged to the poor would enjoy about as much political support as welfare does today. Now that would really be a “Mission Accomplished”!

The privatization of Social Security can be stopped. Bush may no longer have to worry about reelection, but members of Congress do. There can be no more important battle. If Bush is stopped on Social Security, then his political capital will have been spent, and he will be the lamest of lame ducks. On the other hand, if he wins … well, that’s not going to happen.

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I really appreciated your report re. Social Security. I've been hunting all over the Internet trying to make some sense of what is going on with Bush and his madman determination to destroy the program.
I'm not quite clear who these wealthy people are who should be being taxed in regards to the SS trust fund--why would they be taxed and not simply required to pay back with interest what they used from the trust fund.
Just how does the "dipping into" the trust fund work? Do other government departments and groups borrow from the fund? And, in this administration, is there any recrimination if they don't pay it back and with interest? What do corporations have to do with it?
From where is Bush going to borrow $6 trillion to $8 trillion, and how does it effect the trust fund? Are there some plans to not pay back funds?Posted by Rachel Garner on 2005-01-20 17:05:56

I'm pointing out the hypocrisy of a Republican argument, that welfare and social security are handouts, when Republican states benefit more from government intervention than Democrat states. Democrats are not complaining about welfare states, they are reminding Republicans that they are no better than anyone else, they have no moral high ground to stand on.
As for the 1% paying 37%, perhaps you should take your numbers in context sir. The fact of the matter is that the progressiveness of the top 1% has been lowered by every single president, even liberal ones, with the exception of clinton, who slightly increased it. Back during world war II, the top 1% were paying 70% of their income, which was a much more sizable portion of the government's income. However, despite the fact that they get taxed a smaller and smaller percentage of their income, that income is growing too fast to reduce the amount of taxes they pay. Am I supposed to feel pity for the super rich who are making money faster than it can be not taxed? Absolutely absurd, as is the notion of a flat tax, which presumes that everyone benefits equally from the society we create.
Remember, we live in a capitalism, that means the ultimate goal, supposedly, is to own capital. That same 1% who supposedly pay 37% (the numbers i've read had put their burden somewhere between 20 and 22% at present, but your numbers could be a few years old and therefore from the clinton era.) also own something on the order of 40% of the wealth (ie property/capital) in this nation.
Now imagine this scenario as an anology for society. 100 people walk into a restaurant to take advantage of a bulk deal, 100 sandwhiches for 100 dollars. One man walks forward, pays 20 dollars (maybe even 37, only changes the analogy slightly) and eats 40 of the sandwhiches. Sure he paid the most as compared to everyone else, but does that make it right? Do you complain when you have to pay a bigger cellphone bill for more minutes? So then why is it when I spend my entire life laboring away to earn money with the hope of sending my children to college to do the same thing, I'm supposed to feel bad about the taxation of somebody who is making money hand over fist on a barren piece of land because the government took my money to build a highway by it and increase the value.
Long story short, social security is one of the few examples where everyone, even the wage earners benefit from a government activity. It only makes sense, we live in a society, that means we give up some of our freedoms (in this case, economic) so that as a whole we may survive and even prosper as a whole. If only one man is doing well, but that makes the rest of our society appear to be doing well by average, how is that acceptable, even lauded?
Anyways, until next time, this is another piece of socialist liberal scum signing off.Posted by BD on 2004-12-17 09:39:46

Delphi, there is little to add to your comments. Well said.Posted by lee on 2004-12-15 10:21:24

I think another essential question here, that I don't believe has been touched on yet, is where exactly will are dollars go if SS is to be privatised?
Under the current system, I can be comfortable knowing that my money is being put into a fund to benefit my fellow citizens when they become elderly or are dispossesed.
If SS is privatised, will I now be given a limited selection of corporations to invest in? Many of which I don't respect, nor want to give my money to? Who's ethics may be questionable? I am told that the portfolio will be varied, and I will have a selection of portfolios to choose from - even then, there will be large, multinational corporations receiving my dollars to assist them.
Here's the question - what if I don't want to invest in these corporations? What then?
The economic theories that support this privatisation as a solution to our financial woes, make the assumption that we, as citizens, are ultimately in this for the money. That our motivation as human beings is simply to provide for ourselves and the result of this will lead to benefits for others - trickle down economics. This theory completely strips us, as people, of our altruistic capabilites. That as motivation, we do things simply to help others. This is a foreign concept to many economists. And I take issue with that. I think most of us should. It strips us of our highest, most respectable characteristics, and places us, people, within a "model" devoid of our most valuable asset - our humanity.
Or is that not part of the equation?Posted by Delphi on 2004-12-15 08:21:46

Hey BD - Read http://online.wsj.com/article_email/0,,SB110290129211398078-IdjgYNglah3o5ypaHqHaamCm5,00.html
From the article above:
"Of all the Democratic complaints about the presidential election, the most interesting and ironic came from Lawrence O'Donnell, a leading party strategist and former aide to Sen. Pat Moynihan. He complained on MSNBC that, "The segment of the country that pays for the federal government is now being governed by the people who don't pay for the federal government." Mr. O'Donnell added for good measure, "Ninety percent of the red states are welfare client states of the federal government."
It hardly seems either consistent or politically "on message" for Democrats to talk about "welfare client states" when describing Social Security checks received by Floridians and Black Lung benefits received by West Virginians. Redistribution has been the sine qua non of Democratic economic policy for 70 years.
Of course, many conservative Republicans have a similar complaint on the tax side of the ledger, noting that the top 1% of taxpayers pay 37% of the federal income tax while the bottom 50% pay just 6%. Of course, both points are related. Rich people pay disproportionately more taxes than do other people. Blue states have higher average incomes, more rich people, and therefore pay higher taxes, than do red states."
and a litte further down:
"Mr. O'Donnell's complaint seems to be that blue states like Connecticut pay a much higher average tax rate than do red states like Oklahoma, making them carry a disproportionate share of the federal tax burden. If that is so, enacting John Kerry's proposed tax hike on high-income earners would only have made things worse."
So maybe BD would like to go to a flat tax, as a more fair alternative?Posted by ummm on 2004-12-14 06:46:33

I don't understand how reading what a SS report verbatim is seeing what I want. I'd rather be completly wrong about this and not have to worry about SS because what BD said about outsourcing is entirely true. That's affecting money we make now not 38 years from now. But the article explaining where money is supposed to be coming from (and in today's corporate world I don't trust that they will pay it back) that to me means the money isn't there. I don't write checks for my bills before I get my paycheck, that's a pretty risky practice. All I'm saying is that 401 k's and IRA's tend to be more stable from what I've seen. Enron is as isolated event and most people were just greedy with their retirement, once again this leads back to there aren't that many innocent victims in this world. Never put all your eggs in one basket especially when it comes to financial planning.
I need to do more research but I think Bush has spent more than most on education and I don't think that's going to help. I don't know much about pell grants I was never eligible for them. I paid for my schooling through company reimbursment and my G.I. bill. By the way thanks to everyone on this board for the extra money.Posted by giantsox on 2004-12-13 14:56:06

It is worth noting that red states recieve more federal dollars per dollar paid to the government, and vice versa for the blue states. The government "teat" is really a good service for those southern ruralites. Perhaps an investigation into where all that milk goes would be in order before the babies start wailing.
Frankly I think it was pretty clear that this is an invented crisis. You can see the motive in the article, in order to pay back those bonds the government is going to have to tax the wealthy in america. Ergo, privatize social security and they're off the hook. And moreover, is it really a problem that something will be somewhere between where it is now and where it is supposed to be in 2042? Think about the pell grants for college that are being cut at this very moment, or the homeless and unemployed or recently downsized who have been suffering since before the bush re-election. These are problems that are smacking us in the face as we speak. Comparatively, something that won't see a downgrade in service until 2042 is, in my mind, rather healthy by comparison.Posted by BD on 2004-12-13 11:46:56

"As for a real attempt at a solution to a real particular problem, i see putting SS money into private accounts as being both tractable and desirable. Plus it has the advantage that it gets people off the government teat and standing up for themselves."
---so your solution is that it's "tractable and desirable." Oh, and it gets people off the "government teat". Nice...Ok - great solution! That clears it up then! Thanks! :)Posted by Delphi on 2004-12-13 08:56:29

To the posters that cannot find links that previously were on executive deot sites. This has been going on since way before the election. At first, if you had a good search string, the documents were buried but could be found. This is still true of many documents. Gradually, however even a smart search string is not working. Front pages, which used to be full of quick links for citizen questions have increasing been replaced with links to political stances and dogma. Also, there appears to be a strange priorization thing going on with hits during a search. Not daring to remove documents specific to the previous administration, the first page of search hits might be all Clinton era documents.Posted by Marion on 2004-12-13 07:46:41

You see what you want to see.Posted by Matt Harris on 2004-12-12 12:49:06

I tend to lean more towards official reports rather than news articles. I've said it before let me see the facts and I'll do my own analysis I don't need something fed to me. When I read SS's own report it looks to me like the funds will be exhausted in 2042 and medicare is in even more trouble. How is this inventing a crisis? Looks to me like we don't have to invent one, it's here.Posted by giantsox on 2004-12-12 11:48:23

For a good article on why there is really no "social security crisis" see Paul Krugman's column in the 12/7/4 edition of the NY Times entitled, "Inventing a Crisis".Posted by Matt Harris on 2004-12-11 18:13:45

The essence of socialism seems to be a balance between civil society, private initiative and government, each with their own merits and demerits in a continual push/pull arrangement in which neither is capable to displace the others and rush into chaos or indifference or tyranny. With the formation and then standardization of the nation state as the basis for deliberating upon the ordering of human affairs, traditional cultures, alliances of convenience, brute force, mass movements, elite privilege, etc. have theoretically given way to reasoned approaches for achieving stability, security and prosperity at the state level. One should perhaps take the title “social security” at face value first, recollecting the conditions that gave rise to it.
The current popular trend towards privatizing social values might begin with Ayn Rand. Then on to Milton Friedman’s Free to Choose and the macro-economic, top down monetism management strategies of Volker and Greenspan. Under such thinking GDP and GNP indicate national economic strength, perhaps overlooking internal disparities.
In a sense, this might be a clever return to the mercantilism that Adam Smith decried as the bane of the Wealth of Nations –Kevin Phillips has noticed something of the same trend: Nations in competition against each other at the expense of their own stability, security and prosperity.
We go through these cycles perpetually, but the real goal should be to arrive at a stable state. For this reason I like the theoretical socialism that keeps social sensibilities, private initiative and participatory government hitched to the same harness, rather than any of them being in the lead.
If one wants to gamble on the market for their bread and shelter in old age then they might be free to choose to do so. However, should they inherit only a miserable countenance at that time, one must wonder what to do as they shuffle into the lines of the dispossessed. We are a state, after all.Posted by Joe on 2004-12-11 14:56:12

I followed the hyper link to the SS's report and although I only read a portion of the summarized version it looks to me like SS isn't on steady footing. It looks like the reserves will be exhaisted in 2042. Can someone please explain how this is considered solid footing?Posted by giantsox on 2004-12-11 11:45:21

I think the comparison of home ownership vs retirement ownership is good. The point is why should the US taxpayers provide yet another middle class success story (like home ownership) at the expense of the poor?
The goal of the US should be to get everyone to have the same economic status. No rich, no poor. Spread the wealth equally!Posted by Hugh on 2004-12-10 10:58:38

hey, great post Dave. I suppose you are familiar with the books by James Howard Kunstler. "The Geography of Nowhere" and "Home From Nowhere."
If not, y'all should take a look at them. It is quite an eye-opener and pretty damn humorous as well.
Also check out his site at www.kunstler.com
Lots of good stuff there. BTW: Michael Klare, whom I believe has written for this journal, is well aware of these materials.
All the best.
ps: "must be eliminated", the internets is full of comic geniuses.Posted by lee on 2004-12-10 07:46:45

Everyone throws stones. The anagrammatic variety are more clever than piercing , however.Posted by clark Nitrate on 2004-12-10 07:43:34

I think Dave's point was those that live in GLASS (Government Loan Assisted & Socially Subsidized) houses shouldn't throw stones.Posted by Mattdog on 2004-12-10 07:30:25

Well there is the property tax that suburban homeowners pay that supports schools, roads , sewers, utilities, libraries, etc. that the urban beehive dweller doesn't pay. Unless he owns that scurge of mass transit... a private automobile.Posted by clark Nitrate on 2004-12-10 07:15:17

Dave - nice post. So should we have "invisible" subsidies of retirement plans or eliminate the subsidies of home ownership? Or have i misunderstood the thrust of your post?Posted by greatPost on 2004-12-10 06:09:53

why, dave, that's the most sensible post I've read today, perhaps ever. We must now eliminate you.
A propos the subject, there's a great Paul Krugman article in today's NY Times which reiterates some of the late Dave White's points.Posted by rocco on 2004-12-10 02:02:17

Since we're already thinking outside the box here, I'd like to reconsider the original equation ("retirement ownership" is like "home ownership") by challenging the American sacred cow of Private Home Ownership itself.
Widespread "private" homeownership -- and particularly the suburban type so beloved of privatization advocates -- is made possible by government subsidy. Let me count the ways:
(1) Before government-affiliated groups like FHA and Fannie Mae and the rest stepped in and reduced bankers' risk of loss in providing low-rate, long-term mortgages, most Americans could not afford a mortgage. The terms and downpayments were too expensive (if I remember right, downpayments before the government stepped in were in the 20% range, and 30-year repayment schedules were unheard-of). "First-time homebuyer" programs add to this subsidy.
(2) The federal mortgage-interest tax deduction provides an additional direct subsidy to homeowners, one that is not provided to renters. Supposedly, this is because homeownership is more mature or more committed or an "investment in your future" etc., but actually, if we market-rate renters are getting less government subsidy for our housing, doesn't that we're MORE SELF-RELIANT? Thank you.
(3) Suburban single-family housing, in particular, is subsidized directly by local and state funding for roads, highways, sewers, water, transportation of children to school, snowplowing, etc. Let's remember that within any metropolitan area, suburban areas (especially the newer ones) are more geographically spread out, meaning way more miles of highways, sewers, and water lines have to be built per person. Then, these additional miles have to be plowed in the winter, cleaned and repaired (and expanded, since drive-alone suburbanites are so fearful of "public transit") in the summer; all of this, of course, is paid for by the government, often at the state or federal level (meaning that residents of efficient, high-density urban housing have to help pay for your sense of suburban "self-reliance" and "ownership").
(4) Homeownership subsidies are socially inefficient because in order to gain the housing or financial benefits of these subsidies (e.g. home equity), a person or family may choose a housing form that is unsuited to them or ecologically inefficient given their household form. I can't remember how many times I, a single urban renter, have been told I should buy a house "for the equity." I am financially capable of doing so, but from a societal standpoint, how much sense would it make to pay me first-time homebuyer benefits, mortgage interest deduction, and increased sewer/water/road fees, all so I could live in a neighborhood I liked less, spend more of my free time on unnecessary yardwork and home maintenance (that is itself more inefficient done one-single-housing-unit-at-a-time), and pollute the environment more? The same probably applies to most childless couples.
The suburban-homeownership example is just one example of how the "Self-Reliant Republicans Who Never Depend On The Government" simply rely on INVISIBLE subsidies that don't "count" on account of the fact that "mainstream" people use them. People don't think of cars and airplanes as public transit, but roads and highways and airports are all public, and cost more than transit does. They don't think of suburban homes as "public housing," but the mortgage interest deduction is, I believe, the largest Federal housing expenditure.
This is the (evil) genius of Bush's privatization scheme: By telling young folks that Social Security is "going bankrupt" he changes it from an "invisible" program that everyone thinks of as their birthright, to a "visible" subsidy that benefits Those Damn Old People. Later, by making it a program for only the poor, the (by then much smaller) subsidy will become even more "visible" as a target for scorn by those people who aren't eligible for it.
Stock-market advocates should also consider that 401(k)s will all get withdrawn from at the same time too, when the Baby Boomers retire, and so there will be a glut of SELL orders on the stock market as they transfer funds into safer post-retirement investments (like, hey, Federal bonds!). I'm no market expert, but large numbers of sellers, smaller number of buyers, doesn't that mean decline in market value? Hmmm?
To summarize, Bush's privatization is exactly like homeownership: In order for people to be able to afford their dreamed for sense of "private ownership" and "self-reliance" even LARGER subsidies will be required, huge administrative inefficiences will strip away benefits (similar to the road-and-sewer costs of Suburbia), and some people will starve, but, if Bush's marketing scheme works, people will not realize that it is an even bigger Big Government program than the one it replaced.
Dave White
MinneapolisPosted by Dave White on 2004-12-09 18:56:25

Actually, we could save a lot of money if we shot dead everybody 70 and older. Then if we acquisitioned all of their assets, we would be in good shape in no time.
We would save on SSI, Medicare, Medicare, health care costs, AND we would get all of their money into the tax coffers.
Besides, they sit low and drive slow.
The out-of-the-box solution is to get the old people into the box.Posted by lee on 2004-12-09 13:16:19

Technically speaking, SSI is not bankrupt. In fact, it has been running in the black for many years.
The problem is that the US is bankrupt. The US has been running in the red for most of the past 3 decades.
We should pay out SSI as scheduled, we, both figuratively and literally, owe it to ourselves.Posted by lee on 2004-12-09 13:10:52

Pardon me, notReally, but can you say "agricultural subsidies"? And, anyway, why don't you poll your older rural neighbors and see if they don't like receiving their Social Security as much as any urban pansy does.Posted by Urban Prole on 2004-12-08 12:36:55

It's cuz were stoopid and layze. Wood luv to tawk more, butt eye half too get too the well-fare awfice to pik up mi chek.Posted by Mattdog on 2004-12-07 14:11:18

Wowsers - that thar is some great solutions you have come up with (please you keep them for yourself, you "thought" of them!). Did you think of them all by yourself? :)
As for a real attempt at a solution to a real particular problem, i see putting SS money into private accounts as being both tractable and desirable. Plus it has the advantage that it gets people off the government teat and standing up for themselves. But liberals *prefer* dependence over independence. Do you ever wonder why this may be?Posted by whyNot on 2004-12-07 13:47:17

Solutions involve actual plans. You haven't come up with any-maybe because it's "hard work". I imagine your solution to poverty would go something like this: Poor people need to make more money. Your solution to teen pregnancy: abstinence. Your solution for the deficit: privatize it. Wishes are not solutions, my good man, but I sure wish you'd come up with one.Posted by Mattdog on 2004-12-07 12:08:43

How funny! You think that it is "no solution" to privatize SS? And that (1) SS is in good financial shape? Please enlighten us, dear sir, as to why it would be (2) so very expensive to convert SS into private retirement accounts, if it is in such good financial shape (try to think this through - just verbiage like "it is a pay as you go (ponzi) scheme is not only incorrect, but violates 1&2 above). :)
Think hard!Posted by whyNot on 2004-12-07 11:02:21

Seems like there is a lot you can't muster. If you don't understand why it would cost anything to privatize it you don't understand much of anything about the program. I guess your point is that we never should have instituted the program in the first place. You offer "debate" absent any solution.
#2 appears to not be a question, nor a serious concern, but ironically a wedge issue statement-stated from a conservative viewpoint.
I'm an advocate of proposing solutions rather than offering grand generalizations.Posted by Mattdog on 2004-12-07 10:46:17

"that it seems like an awful waste of energy to “fix” a system that isn’t broken."
To believe SS is NOT broken requires more than i can muster. If the system is really all that healthy, why would it cost *anything* to privatize it?
As for benefits of owning ones one financial future, i am an advocate of personal responsibility. While one can take care of a rental house just as easily as a house they own, it seems clear that home ownership inspires people to care more. I believe ownership of ones financial future to be analogous (seeing those dollars pile up, year after year, might prove to be inspiring to some).
BTW, 2 is a serious concern. Ask yourself - why not index the minimum wage to inflation (or use the same formula as we do now for SS)? The answer seems to be that liberals like to use this as a wedge issue. . . I would prefer to fix it once and for all, but that would take away the ability to tell one's constituents (i fixed my typo - aren't you so excited?!) that you have managed to once again beat the heartless Reps and raise it.Posted by whyNot on 2004-12-07 10:11:14

The Depression is over and it's about time somebody scrapped these leftover New Deal programs. Social Security is a ponzi scheme and everybody knows it. What's wrong with pointing out that obvious fact and trying to do something about it?Posted by Ted on 2004-12-07 10:04:24

Why? Besides all of the other reasons for Bush's plan, don't forget that redirecting hundreds of billions of retirement dollars into private accounts would be a lovely gift to Wall Street, which was by far the biggest backer of his 2004 campaign.
http://www.opensecrets.org/presidential/contrib.asp?id=N00008072&cycle=2004Posted by Pete on 2004-12-07 09:39:41

"Why should we NOT allow - even encourage! - retirement ownership?"
We have these-they are called 401Ks.
"I see this as analgeous to home ownership."
Really? I don't.
Here are my responses to your other questions posed:
1) We don't trust brokerage companies.
2) This appears to be a real question much in the way that "constientcies" appears to be a real word.
3) Actually no. Getting rid of a successful program that creates a financial safety net for its citizens would be regressive.
4) How would we pay for privatization? Would we simply cut off benefits to seniors or add to our ever growing national debt (what's another couple trillion to "conservatives")?
What are all these benefits that "retirement ownership" would convey? There are so many other issues facing the country right now (health care, huge deficits, election reform, true homeland security, repairing the Iraq mess, ending state sponsored torture, etc.) that it seems like an awful waste of energy to "fix" a system that isn't broken.Posted by Mattdog on 2004-12-07 09:21:23

notweny has an interesting viewpoint. I rather think it is reversed, but time will tell. . .
(The pansy urbanites are the ones that are addicted to governments bit tit - the more rural people are used to making do and getting by. I have little doubt they will benefit from ownership of their own monies, whilst the urbanites will suffer due to their lack of self disipline and penchant for relying on others to bail them out. . .)Posted by notReally on 2004-12-07 06:02:31

kingfisher has it right. In principle SS is a wonderful program. In reality we would all be better off if we managed our own money (ie, retirement accounts). . .Posted by iAgree on 2004-12-07 05:59:29

"The fact that the government spent the money is meaningless—just as it is meaningless if the government spends the money it borrows by issuing any other bond. The government is still legally obligated to repay the bond."
Yeah...OK. Our government spending money on our behalf that it doesn't have is "meaningless".
That's like saying the ten grand I put on my Visa card last weekend in Vegas is meaningless - just as it is meaningless if I spend the money I borrowed from Visa to pay the monthly balance of another credit card."
Unless the SS fund has in it all the funds needed to keep it liquid, and the interest accrued to those "bonded" funds, it does'nt matter what's in the fund.
It's as if someone has used a credit card to sustain oneself for years, being just able to make the monthly payments. At a certain point the money you might have in the bank does'nt matter.
You owe them X amount and if you can't make the finance payments you go bankrupt. It's just that in this case the credit card company is the government itself and it can keep hawking it's debt on the open market.
The only thing sustaining it is the strength of our economy. The belief is, is that the US will continue to perform and the gov can keep on fudging the numbers to make things look good as real return for SS goes down relative to the cost of living.Posted by kingfisher on 2004-12-06 19:48:38

Bush promised his base to deliver an ownership society. He promised them he'd privatize social security. He is now delivering on his promises. You've got to give him credit for being a man of his word. FDR giveth, W taketh away. To hell with the New Deal, from now on it'll be the Raw Deal.
Am I the only one actually enjoying the spectacle of watching Red State made excrement hit the fan? It'll hit them the hardest you know. Yes, we'll be wiping some of our white collars for a while, but watching the god fearing righteous folk neck deep in it will at least provide a few moments of guilty pleasure. And we'll get to say "told ya so" a lot.Posted by notweny on 2004-12-06 17:11:27

Enron is an interesting case. The people who lost almost everything were foolish or greedy, perhaps both. Their story was that they invested virtually their entire retirement funds into a single stock - and far worse (stupider!) the stock was the company they worked for. (Granted they were lied to, but that certainly does not justify their foolhardiness.)
If we use arguments like this, we certainly should not trust the US to provide us with anything. Just ask the Indians. . .
Lets imagine a simple calculation, If people invested 15% of their income into personal retirement accounts with a reasonable mix of stock and bonds (one could add REITs as well), the expected return is about 7% after inflation. If we assume they work from 25 to 65 and that they make the same salary year after year they would have about 16 times their annual salary at retirement, which could provide a sustainable 70% or their income.
Of course, most people make more as time goes on, but even given this, it seems likely that they could generate about 50% of their income at retirement. Which for most is more than SS. . .Posted by enron on 2004-12-06 07:50:03

"Why should we NOT allow - even encourage! - retirement ownership?"
One word-ENRON.Posted by ann-marie moore on 2004-12-06 07:27:43

Why should we NOT allow - even encourage! - retirement ownership? I see this as analgeous to home ownership.
Is it because:
1) We do not trust people with their own money?
2) liberals use SS as a way to "bring home the bacon" to their constientcies?
3) It is too progressive of an idea (too ahead of its time)?
4) Fill in the blank.
It seems to me that retirement ownership would convey many benefits to our citizens. Do we really want or need to encourage dependence on the government for this very important aspect of our lives?
Please - no hate responses. Surely this is a subject that can be discussed without need of slurs, insults, etc.Posted by whyNOt on 2004-12-06 06:22:03

where did the link go?
did they close it down already?
http://www.ssa.gov/oact/trPosted by Edward H Fields on 2004-12-06 05:53:09

Dean,
missing website, again!
why is it that information and reports are removed from government websites?
...The Social Security trustees’ report (available on the Social Security Administration’s Web site—www.ssa.gov/oact/tr) shows that the program can pay every penny of benefits through the year 2042, with no changes whatsoever.Posted by Edward H Fields on 2004-12-06 05:30:19